House AIG Payback: House Considering Tax To Get Back 90% Of Bonuses

Is AIG about to get payback versus payout from the House and from the Justice Department? It seems that way amid reports that the House will likely vote on a proposal to tax the controversial bonuses given to the bailed out corporate giant as Attorney General Eric Holder looks into ways to recoup hefty rewards given to the failing company’s executives:

The House will vote this afternoon on a bill that would impose a 90 percent income tax on $165 million in bonuses distributed to employees of the troubled insurance giant American International Group, the first of multiple steps that lawmakers are expected to take to quell public furor and tighten government control over AIG and other financial sector recipients of federal bailout aid.

The Senate Finance Committee also is preparing legislation aimed at capturing over 90 percent of the bonus money through a combination of excise and income taxes, and although a vote is not yet scheduled, action is possible this week. And Attorney General Eric H. Holder Jr. announced that the Justice and Treasury departments are jointly exploring “tools” to recover the money.

The idea is to try and get the people who got the bonuses to return them voluntarily. How much sentiment is there for this?

House Ways and Means Chairman Charles Rangel (D-N.Y.) had been a critic of the tax approach, suggesting earlier this week that the legal system was the preferred route for recouping the AIG money. But he reversed course as the idea gained broad support among an outraged citizenry and on Capitol Hill.

Rangel’s about-face is a good indicator of how strong the political — populist — winds are on this issue. And both parties are scrambling to try and be seen as the real populist force. The irony: most of these politicos contributed to the situation they are now denouncing. The Republicans blaming the AIG mess on the Democrats. But the sentiment isn’t unanimous: conservative talkers Rush Limbaugh and Sean Hannity (who don’t have to worry about small paychecks) are defending the bonuses. Meanwhile, the NY Times uses the cringe-worthy phrase “defining moment” to describe the situation of the Treasury Secretary Timothy F. Geithner.

(FOOTNOTE: To comment on this using all the cringe-worthy journalistic phrases we can we offer you this: Many believe it is now a defining moment for Geithner because at the end of the day some think he’s trying to change the subject when he talks about the economy which has battered everyone including a Marine and his buddy [a military associate's friend is always described as a "buddy," even if they detest each other"] at Camp Pendleton. Many Americans think politicians just don’t get it as the citizens rebuild their shattered lives.

Dick Polman can just imagine what the politicos are twittering to each other…

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